Michael McWhertor

Yesterday, Kotaku Australia reported that a software update for the Xbox 360 was causing some consoles to stop reading game discs, which Microsoft was addressing in the form of all-new replacement Xbox 360s and free Xbox Live subscriptions.

We've just had a look at a verified email, sent from Xbox LIVE customer support, claiming that …
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The original report believed that the issue was related to the forthcoming software update for Xbox 360 that boosts game disc storage space and introduces new anti-piracy measures. That's not the case, according to Microsoft.

So, Microsoft is testing a "new disc format". The more fanciful of you are thinking that…
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"The console replacement plan that is the subject of some of today's headlines is related to a previous update, NOT the system update that has been in public beta and will be deployed shortly," writes Larry "Major Nelson" Hryb on his blog.

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"The new disc format that is part of the beta has been rigorously tested across all Xbox 360 models and there are no known compatibility issues."

The next Xbox 360 system software update has been beta tested by consumers over the past few weeks. It's slated to go wide starting May 19.